The euro continues to threaten the Swiss franc, as a minor breakout has occurred during the Tuesday session.
EURCHF
The euro has been very noisy against the Swiss franc during trading over the last several weeks including the Tuesday session. The market has broken to the upside on Tuesday clearing the 50-day EMA. The euro against the Swiss franc is currently caught in a bit of a tug-of-war between the safe-haven flows heading to Switzerland and central bank intervention threats coming out of the Swiss National Bank.
The Swiss National Bank recently held its policy rate steady at 0% but explicitly increased its rhetoric regarding foreign exchange interventions. The SNB is drawing a line, if you will, against rapid Swiss franc appreciation as long as the ongoing conflict in the Middle East continues to drive safe-haven demand that threatens Swiss exports and risks deflationary pressures.
Diverging Inflation Outlooks
Conversely, the European Central Bank has held their rate steady at 2% but revised its 2026 inflation forecast up to 2.6% mainly due to energy price shocks. While the euro is technically supported by more hawkish inflation outlook compared to the Swiss National Bank, the pair remains heavy as the market favors the safety of the Swiss franc in general.
That could be changing during the session on Tuesday and that is exactly what I'm watching. The Swiss National Bank's willingness to decisively intervene is currently the primary floor and it is worth noting that the 0.90 level has acted as a hard basement floor so far.
If the market were to break above the 0.9189 level, I think it could send this market higher. The 0.91 level should be supported. If it breaks down below there then we will start to pay attention to whether or not more rhetoric comes out of the Swiss National Bank.